Interview: Peng SUN, Kean, Foresight News

"Next cycle is still Ethereum," Renzo founder Lucas Kozinski firmly stated in an interview with Foresight News. Despite the lack of explosive growth in current Web3 applications, Lucas believes that the cost reduction of Rollup and the upcoming AVS service to be launched on EigenLayer will bring the possibility of an application layer explosion.

The Renzo team is not what we imagine. Perhaps you have seen their $3 billion TVL, perhaps you have seen their investments from VC firms such as Binance Labs, Maven11, OKX Ventures, and IOSG, but these are all flashy appearances.

The Restaking narrative began in January 2024, but Renzo, as the first LRT protocol to go live, was already launched in December of last year. Although all three founders are veterans in the crypto industry, Renzo can be said to have started from scratch. Starting a business since last summer, they relied solely on their own funds until they met Maven11 in Turkey in November, and no one has received a salary. This is the second LRT project I have heard of this year that couldn't pay salaries for several months last year, and they both received investments from Binance Labs this year.

Survivorship bias in the crypto industry is always significant, but Renzo's success is not accidental. When you open the Renzo website, you will find that it integrates with many DeFi protocols and Layer2 networks, all of which reflect Renzo's three-step strategy, pursuing liquidity, efficiency, and risk management. "We will start from the Ethereum mainnet, expand to L2, then enter decentralized exchanges from L2, integrate with CEX, and eventually users will be able to buy and hold ezETH on Coinbase, OKX, and Binance," "ezETH will be everywhere," this is Lucas's vision for Renzo.

Modularity has brought challenges to Ethereum, but in Lucas's view, this is a positive-sum game rather than a zero-sum game. As EigenLayer's AVS launches successively, reducing developers' development costs on Ethereum, and allowing the sharing of economic security of the Ethereum mainnet, "everything will come back to Ethereum."

I. The Crypto Entrepreneurial History of Veterans

Foresight News: Thank you for accepting the interview with Foresight News. Please introduce yourself and the team, as well as your experience in the crypto industry.

Lucas Kozinski: Renzo has three founders: myself, James Poole, and Kratik Lodha. The three of us have 6 to 7 years of full-time work experience in Web3. James has been a full-time engineering manager since 2016, I have been full-time in Web3 since 2017, and Kratik Lodha is our research and product lead, joining the industry in 2018.

I was born in Poland and moved to New York with my family when I was five. I started trading coins in 2014, but the Mt. Gox incident caused me to lose a lot of money. At the end of 2016, I re-entered the industry and experienced the bull market from 2016 to 2017. In early 2018, I joined the Tezos Foundation as a project lead, and in early 2020, I joined Tokensoft as the Chief Business Strategist and COO.

At the end of 2021, I left Tokensoft to become the founder of Moonwell. This is a lending protocol we launched on Moonbeam and Polkadot Kusama, which is still the largest DeFi protocol on Polkadot and the largest mining protocol on Base.

Kratik previously worked at Woodstock Fund, which invested in Moonwell, and that's how we met. In May of last year, Kratik left Woodstock, and I also left Moonwell in May. Then, from July, we started discussing launching a project on EigenLayer. In August, James joined us as the third founding member, so we started building Renzo last summer.

Foresight News: It's great that you have come this far. Why did you choose the Restaking track, and what prompted you to create Renzo? What kind of project do you hope Renzo will become?

Lucas Kozinski: The reason I am very excited about developing on EigenLayer is that it is the first time I have noticed that there will be an open market in the Web3 field. The importance of an open market is that it allows for open innovation and competition.

Historically, when a new ecosystem is launched, foundations usually do two things: they either choose projects that they want to position very well in the ecosystem and grant them funds in the form of liquidity rewards. This structure has some difficulties, the main one being the difficulty of innovation, as only top projects can grab liquidity and funds. With EigenLayer as an open market, there will be no situation where foundations only provide liquidity incentives for DeFi protocols. EigenLayer will allow for innovation, and whoever occupies the market share first, has the safest liquidity and liquidity distribution channels, and is the most efficient, will be the ultimate winner.

In addition, as long as there is complexity and fragmentation, we have the opportunity to create value for users. Therefore, when you consider the relationship between Eigenlayer and all AVS and operators, you will realize that it brings a completely new ecosystem and technology stack. By solving these problems and improving user efficiency, we have many opportunities to add value.

Foresight News: What is the team structure of Renzo? Where are the members located, and how do they collaborate?

Lucas Kozinski: Renzo now has 15 members, and we are growing very fast. Since December, our team has doubled in size. Most of Renzo's members have known each other and worked together for many years, which is very important because this team is self-organized. Therefore, while other projects may have only the CEO or leader making decisions, Renzo is very unique; it is a decentralized group. We have industry OGs who entered the industry in 2016 and 2017, and they are very professional and have strong execution. We believe that having a CEO or leader in charge of managing daily work can easily create bottlenecks and hinder rapid development.

Currently, Renzo has three departments: the engineering department now has 10 full-time engineers, the product and research department has two people, and the BD marketing and operations department has three people. We established a foundation from the beginning, and most members receive compensation directly from the foundation.

We are distributed all over the world, with 4 people in India, 1 person each in Hong Kong, Australia, and Budapest, and several people in the United States. This is a completely decentralized team. We have a synchronous meeting every Monday morning to unify everyone's opinions and discuss the issues each person encounters. The team will then self-organize for the rest of the week because everyone is in different time zones. At the beginning of each workday, they will write down their work content and any issues they encounter on Slack. Half an hour before the end of the workday, they will do a simple summary so we know they are about to finish work.

Foresight News: In Renzo's entrepreneurial journey, what do you think has been the biggest resistance/difficulty you have encountered?

Lucas Kozinski: The most difficult moment was actually when we were just starting to build and operate. At that time, no one really understood what Renzo was, and they thought the total market size was not large enough and didn't see the value. So for a long time, we struggled without investors, community, or products. But this is precisely Renzo's advantage and the reason why Renzo can succeed.

Due to the pressure and struggles last year, we did indeed encounter difficulties in terms of funding. It wasn't until November that we met Maven11 in Turkey. The culture of Renzo is very humble, and we are completely self-reliant, ensuring that the money is used where it matters most. We persisted for several months without salaries, with everyone working voluntarily, essentially using our own money to push Renzo into the market.

It's hard to imagine how difficult it was, especially when you have to start from scratch, from nothing to seeking funding, and then achieving what we have today. But we learned how to work under pressure, we have a survival instinct, we dare to fight, we have strong execution, and we can quickly adjust our strategic direction. We launched the product on December 18th and within 13 weeks, we gained over $20 billion TVL, becoming the fastest-growing liquidity restaking protocol and a top EigenLayer project.

II. Renzo's Three-Step Strategy: Liquidity, Efficiency, and Risk Management

Foresight News: Please introduce Renzo's current main products and business progress.

Lucas Kozinski: Currently, Renzo's plan is divided into three stages. The first stage is to increase liquidity and distribute liquidity, the second stage is to improve efficiency, and the third stage is to build a portfolio for risk management, which will take approximately one to one and a half years.

Renzo is currently in the first stage, which involves TVL and DeFi integration. Within 13 weeks, Renzo integrated over 50 DeFi protocols and launched native restaking on BNB Chain, Mode, Linea, and Blast on these 5 Layer2 networks, with three more to be launched soon. Historically, projects that have done well in liquidity distribution have captured a large market share through liquidity distribution and integration, gaining the trust of users. Without better products or higher yields, other projects find it difficult to enter the market. If Renzo has a high yield, it means that the cost for other projects to enter and compete for market share will be high. Secondly, we know that liquidity is king. The stronger the liquidity and integration, the more widespread the adoption. In fact, Renzo has very strict requirements for liquidity, and we can provide Chainlink price feed services, something no other LRT protocol can offer. The market has always paid close attention to TVL as a leading indicator, and we use liquidity and DeFi integration as a measure of who is the first.

The second stage is efficiency. Eigenlayer is very complex, running on the Ethereum mainnet, and every transaction incurs gas costs, which can significantly reduce yields and returns for stakers, which is what we mean by efficiency. Next month, AVS will begin launching on EigenLayer, which is an efficient solution that can return rewards generated by AVS to stakers. It is difficult for traditional LST protocols to expand after transitioning to LRT protocols, but Renzo can capture rewards and efficiently return them to our stakers.

The third stage is to build a portfolio after AVS activates the "Slashing" function in the next 6 to 12 months. We have been working with companies like Gauntlet for over three years, and they have helped us establish some risk and portfolio construction frameworks.

Foresight News: In a very short time, you have supported networks such as Arbitrum, Linea, Mode, Blast, and BNB Chain. What was the consideration behind this?

Lucas Kozinski: The earnings of ETH holders come from the Ethereum mainnet, and users will cross-chain to the Ethereum mainnet for arbitrage. If we don't support these networks, users and TVL on Layer2 will be lost. Renzo migrates Restaking to L2, allowing users to continue native restaking on Arbitrum, BNB Chain, Linea, Mode, and Blast with lower gas fees, providing the same DeFi integration as the Ethereum mainnet. Renzo will cross-chain this ETH to the Ethereum mainnet, contributing to the economic security of EigenLayer.

Foresight News: Renzo is the first Restaking project to be launched after EigenLayer. What sets Renzo apart from similar competitors? What is its biggest advantage, including in terms of technology, products, and the market?

Lucas Kozinski: We are the first Restaking project to be completely built from scratch, with a new team, new investors, a new community, new TVL, and new integration. Renzo does not have an LST token but can provide native ETH returns. The difference is that we don't have to issue notes for the floating part, which is an outdated technology.

Most importantly, Renzo adopts a single-coin model, not a dual-coin model. We don't have Rebase and Reward-Bearing tokens, and we don't need LST and LRT tokens to improve efficiency. Renzo is highly scalable, with high integration and liquidity. Fundamentally, we have a highly efficient and clean technology stack that can effectively protect AVS and return these rewards to our users with low risk.

Foresight News: Many projects in the Restaking track are focused on depositing and staking, but liquidity is crucial for both public chains, DeFi, and LRT assets. What are the utilities of ezETH as an LRT asset? What are the future use cases? Will there be various DeFi applications built based on Renzo/ezETH?

Lucas Kozinski: The ETH restaking market has determined that ezETH is the most liquid asset, and ezETH will integrate with many protocols, gradually increasing its use cases and adoption. We are truly excited about the decrease in Rollup costs, and Rollup and L2 on Ethereum will experience explosive growth. Now we must build the entire ecosystem, integrate with more projects, and expand our use cases. In the future, there will definitely be many customized Rollups focused on DeFi or user applications. Just like AltLayer today, you can launch a Rollup in 3 to 5 days. These Rollups will use LRT, especially using ezETH as their gas token.

Foresight News: Recently, you collaborated with Polyhedra Network to provide $1.8 billion in economic security for its Bitcoin interoperability protocol. Can you elaborate on how you will expand into the Bitcoin ecosystem?

Lucas Kozinski: Renzo will focus on securing Bitcoin services and providing economic security for them. Projects like Babylon have piqued a lot of interest, and Renzo will serve as the restaking token for these ecosystems. We are having many conversations, but there are currently no commitments. However, these conversations are ongoing, and relationships are being established.

Foresight News: Cobo previously published an article introducing "EigenLayer Restaking Risks and Best Practices," which mentioned contract risks, LST risks, and withdrawal risks for current Restaking protocols. How does Renzo manage and protect user assets?

Lucas Kozinski: Like any other DeFi protocol, I have always made sure that community members are aware of the risks of using defaults. From day one, Renzo hired an auditor and open-sourced smart contracts, with each contract upgrade being re-audited. We launched the Immunefi bug bounty program and use institutional-grade node operators. Renzo also uses on-chain monitoring services like Hexagate to identify malicious activities. If there is any suspicious activity on the chain, deposits are automatically paused, and withdrawals are quickly made.

We have always been very cautious and have gradually introduced new features and new risks. Withdrawals are currently disabled, and the reason for this is that Renzo has only been live for 14 weeks, and EigenLayer is still deployed on the M1 contract, undergoing an upgrade to the M2 contract in preparation for AVS mainnet. All other changes to withdrawal protocols have a 10-day timelock, and now we need to upgrade the contract, including upgrading the withdrawal logic, re-auditing, and then enabling it on the mainnet.

Because we have to update the code again and introduce additional risks, Renzo strategically decided not to enable withdrawals for the M1 contract temporarily. Although the team is ready for withdrawals, we are still waiting for EigenLayer, so that Renzo can start protecting AVS, and then we will enable withdrawals on both contracts. But there will be a cooldown period for withdrawals at that time, so that Renzo can identify if there are any vulnerabilities or malicious attackers. If there are any issues, the Renzo protocol, foundation, and DAO will be able to pause withdrawals.

III. "We believe everything will come back to Ethereum"

Foresight News: What is Renzo's roadmap and future plans for 2024?

Lucas Kozinski: First, we will integrate more DeFi on the mainnet. Renzo is the first LRT protocol, and lending protocols like Compound, Aave, and Morpho have proposed governance proposals to use ezETH as collateral. Renzo will also collaborate with MakerDAO to use ezETH as collateral for DAI.

At the same time, ezETH will also expand to public chains like X Layer and BNB Chain and integrate with CEX, allowing users to eventually buy and hold ezETH on Coinbase, OKX, and Binance. This is our goal, starting from the Ethereum mainnet, expanding to L2, and then entering decentralized exchanges from L2. This will not only open up many new products and integrations for retail investors on centralized exchanges, but also receive support from Coinbase Prime, OKX, and Binance. In the future, Renzo will also integrate with Fireblocks, Ankr, Ledger, Metamask, Binance Web3 Wallet, OKX Web3 Wallet, Coinbase Wallet, and others.

Secondly, Renzo will begin to protect AVS. Currently, there are about 60 AVS preparing to launch on EigenLayer. Whether you hold ezETH in a self-hosted wallet, exchange, or elsewhere, you will benefit from EigenLayer and airdrops. After AVS launches various point systems, ezETH will be ubiquitous, and airdrops and real rewards will form a permanent incentive cycle as ezETH accumulates.

Third, Renzo will truly focus on the governance, portfolio, and risk management of EigenLayer, which may continue until the end of the year. We will look for new L2 opportunities, collaborate with ecosystem projects, and ensure that ezETH settles as a gas token on different chains. For users, you can deposit wrapped ETH on the Renzo app without worrying about becoming an LP on DEX or lending protocols, and access new earning opportunities with a single click.

Foresight News: Renzo has not yet disclosed any token information. Can you reveal some details? For example, how long will the current point activity continue? What will be the utility of the Renzo token?

Lucas Kozinski: I can't reveal too much here. We try not to set expectations for the community. As I just mentioned, ezETH will be ubiquitous and have many use cases. Renzo's overall goal is to make ezETH accessible to everyone and allow free staking of ezETH. I can't set a deadline for the duration of the activity, but the changes in Web3 are too fast. I think a mistake that project teams often make is misleading community members and doing things they may not be able to achieve.

Foresight News: What opportunities and challenges do the emergence of modular blockchains like Celestia bring to Ethereum?

Lucas Kozinski: We see more narratives about Restaking and modularity, and they are receiving more attention. I think their adoption will be higher, and there will be greater potential for future use cases. As Renzo matures, DAOs will have the opportunity to figure out what this actually means and what risks they are willing to take, which fundamentally is not a zero-sum game. The bigger the Restaking narrative, the more opportunities there are for everyone in the ecosystem to share the pie.

Foresight News: Where do you think the value support for Restaking lies? What innovations and challenges will there be in the future of the Restaking track?

Lucas Kozinski: Let's talk about challenges first. First, this is a very complex ecosystem. As more and more projects build in the Restaking field, there will be more fragmentation and changes, and Renzo is working closely with EigenLayer operators and AVS to address these issues. For Renzo, this means more opportunities to improve efficiency and provide value to stakers. So the biggest challenge is how to make things simple? And how to abstract all the complexity for users, because that's where the value is, and that's what excites us.

I think the next cycle will still be Ethereum. Of course, when we talk about Ethereum now, we think of Rollup, Base, or large DeFi ecosystems. But what we haven't seen in Web3 yet is the explosive growth of real applications that users want to use. People usually don't use blockchain as the underlying settlement layer for transactions because the cost is too high, but Restaking or Rollup can solve this problem. We will bring a lot of innovation, even though we don't even know what kind of services or applications people want to launch. But fundamentally, they will be easy to launch on L2 and L3, and very cheap. The new cycle will see the launch of many customized applications, which will require new AVS services. The applications launched with the launch of AVS will not only bring additional income and reward opportunities for Renzo holders but will also expand to other ecosystems.

We believe everything will come back to Ethereum. Now the transaction cost of Base is lower than Solana, and it is fully decentralized. But I think there is one thing you have to solve, and that is user experience. If you are an Ethereum developer, you don't need to invest tens of millions of dollars in infrastructure, just focus on building user-facing products.

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